Basics strong, we’ll bounce back: Singh

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Maintaining that it would be wrong to draw a conclusion based on rating agency Moody’s forecast to downgrade India’s GDP, Prime Minister Manmohan Singh on Saturday said that while it was no doubt a cause of concern, this, however, did not mean that the country would not be able to do better than last year’s 6.5 per cent growth.

Dr Singh felt that fundamentals of India’s economy are still strong. The Prime Minister was speaking at the sidelines of a function in Rashtrapati Bhavan, where Vice-President Hamid Ansari was administered oath of office. When asked to comment on Moody’s analysis of the Indian economy, he said, “It is a cause of concern but one should not draw unwarranted conclusions.”

Moody’s research arm had scaled down its forecast for the country’s economic growth this fiscal to 5.5 per cent earlier this week.

Dr Singh, however, expressed hope that India would do better than last year’s 6.5 per cent economic growth. “The fundamentals of the Indian economy are strong. Investments and savings are among the highest in the world. I’m hopeful that we’ll do better than the 6.5 per cent growth performance of last year,” he said.

Moody’s, however, had said that India’s GDP growth rate is likely to be 5.5 per cent this year, while in 2013, growth is expected to be 6 per cent, adjusted from 6.2 per cent earlier.

Meanwhile, the BJP accused the Prime Minister of living in a 'denial mode' and suggested the government treat the present problems as a 'wake-up' call and take effective measures.

“The patient does not want to be treated. He is convinced that he is not unwell.... The Prime Minister’s statement that the fundamentals of the Indian economy are strong comes as a surprise. It clearly shows that he is living in denial about the real state of the India economy,” Leader of Opposition in Rajya Sabha Arun Jaitley said.

“The sentiment is low. India is no longer an investment destination. Inflation has reached unacceptable levels. Infrastructure ministries are moving slowly. Corruption has created an adverse environment. This government is being accused of policy paralysis,” Mr Jaitley said, adding that economy is 'not run by bravado'.